Annual House Price Growth at Lowest Rate for 5 Years
Em Morley - December 20, 2018
Annual house price growth in October – for which the latest
official data is available – was at the lowest rate for over five years,
according to the most recent House Price Index from the Office for National
The average house price in the UK rose by 2.7% in the year
to October, which is down on September’s rate of 3.0%. This is the lowest
annual growth rate since July 2013, when it was 2.3%.
Over the past two years, there has been a slowdown in UK
house price growth, driven mainly by a decline in the south and east of
During the year to October, the lowest rate of growth was
seen in London, where the average house price dropped by 1.7%. This is up,
however, from the 1.8% decrease recorded in September.
The average UK house price in October was £231,000. This is
£6,000 higher than in the same month of last year.
On a non-seasonally adjusted basis, the average property
value in the UK fell by 0.2% between September and October this year, compared
with a 0.1% rise during the same period of 2017.
On a seasonally adjusted basis, the average house price in
the UK increased by 0.2% between September and October 2018.
House prices in England grew slower than other countries of
the UK in the year to October, at an average of 2.4%, which is down slightly on
the 2.6% recorded in September. The average property in England is now worth
House prices in Wales rose by an average of 3.8% in the 12
months to October, to reach £161,000.
In Scotland, the average property value was up by 4.4% on an
annual basis, to stand at £152,000 in October.
The average house price in Northern Ireland currently sits
at £135,000, following an increase of 4.8% over the year to the third quarter
(Q3) of 2018.
Across the English regions, the North West showed the
highest annual house price growth in October, at an average of 4.9%. This was
followed by Yorkshire and the Humber, at 4.4%.
London had the slowest annual growth of all English regions,
at -1.7% in the year to October. House prices in the capital have fallen every
month this year since July.
While annual house price growth in London is slowing, it
still remains the most expensive place to purchase a home, at an average value
of £474,000, followed by the South East and East of England, at £327,000 and
The North East continues to have the lowest average price,
at £128,000, and is the only English region yet to surpass its pre-economic
Falling house prices in London are driven primarily by inner
London, for which annual growth has been consistently negative since January
this year. In the 12 months to October, house prices in outer London fell by an
average of 0.2% – its first annual decrease since September 2011.
Both inner and outer London seem to follow similar trends in
house price growth, with changes in outer London tending to appear slightly
after those in inner London.
The Bank of England’s November inflation report highlights
that the slowdown concentrated mainly in the London market since mid-2016 is
probably due to the area being disproportionately affected by regulatory and
tax changes, and also by lower net migration from the EU.
John Goodall, the CEO and Co-Founder of buy-to-let
specialist Landbay, says: “Amidst a
volatile political and economic landscape, the hesitance of buyers and sellers
to act is completely understandable. Combine this with the traditional seasonal
slowdown, alongside historically low levels of transactions, and stagnant house
price growth really is no surprise. As we wait to see how Brexit uncertainty
unravels, the private rental sector will play a more important economic role
than ever, as it provides flexibility and value to renters and landlords
Lucy Pendleton, the
Founder Director of independent estate agent James Pendleton, also comments: “House price growth is still bouncing around five-year lows, but it’s in
London where the market is readying itself for a recovery in transaction
numbers early next year.
“First time buyers are eagerly watching
a contraction that, once you factor in the effect of inflation, is resulting in
starter homes in the capital becoming much more affordable.
“London has posted a solid four months
of annual price falls now, which is enough to begin to make a meaningful
difference to the value proposition of these homes.
“The North East was the first to follow
suit and post negative annual growth, but it won’t be the last. The regions are
likely to continue to follow this trajectory as we head into early 2019.
“The fact that a correction in prices is
unfolding now in London, where prices are highest and there is most
competition, will let some pressure out of the market and inject some
much-needed new blood into the volume of sales.”
Chris Sykes, the Mortgage Analyst at
Private Finance, gives their thoughts on the capital: “London’s property market in 2018 has been a tale of
two cities. While outer London house prices have remained relatively resilient
over the course of the year, inner London – a hub for both foreign and domestic
investment – has been hit hard. Punitive measures imposed on buy-to-let
investors, combined with the prospect of the UK crashing out of the EU, has
dissuaded potential property investors. Central London property prices have
witnessed consistent decline over the course of the year, now down by 3%
“While the rest of the UK
may be enjoying positive growth for now, with the North West witnessing house
price growth of nearly 5%, it’s important to remember the wider UK property
market often takes its lead from London. With Brexit uncertainty likely to
continue well beyond March 29th, UK house prices could be set to weaken
nationwide in 2019.
“With property prices
acting as an important barometer of strength for the broader UK economy, these
figures will be a source of discomfort for some. However, for first time buyers
that have long been priced out of the property market, this ongoing uncertainty
marks a time of opportunity, as they gain some respite from soaring house
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